The Foreign Contribution (Regulation) Act, 2010, commonly known as FCRA, governs how Indian NGOs and associations can receive and utilise foreign donations. FCRA compliance is complex, and the consequences of non-compliance are severe — including cancellation of registration, freezing of bank accounts, and even criminal prosecution.

This checklist covers everything your NGO needs to do to stay FCRA-compliant in 2026.

Understanding FCRA Basics

FCRA registration is required for any Indian NGO that wants to receive donations, grants, or contributions from foreign sources — including NRIs, foreign foundations, international NGOs, and foreign companies. The registration is granted by the Ministry of Home Affairs (MHA) and is valid for 5 years.

Who Needs FCRA Registration?

  • NGOs receiving grants from international foundations (Ford Foundation, Gates Foundation, etc.)
  • Organisations receiving donations from NRIs or PIOs
  • NGOs partnering with foreign agencies for project funding
  • Religious institutions receiving offerings from overseas devotees

FCRA Compliance Checklist for 2026

1. Maintain a Designated FCRA Bank Account

Every FCRA-registered NGO must maintain a designated FCRA account at the State Bank of India, Main Branch, New Delhi (as per the 2020 amendment). This is your primary receipt account for all foreign contributions. You can also maintain a secondary utilisation account at any scheduled bank, but all foreign funds must first be received in the SBI Delhi account.

2. Separate Domestic and Foreign Funds

This is non-negotiable. FCRA funds and domestic funds must be maintained in completely separate bank accounts. There should be no mingling of funds at any point. Your accounting system must clearly distinguish between FCRA and non-FCRA income and expenditure.

3. Use Foreign Funds Only for the Stated Purpose

Foreign contributions must be used only for the purpose for which they were received. If a grant was given for a health programme, you cannot divert those funds to an education programme without the donor's written consent and proper documentation.

4. File FC-4 Annual Return

Every FCRA-registered NGO must file the FC-4 annual return on the FCRA portal (fcraonline.nic.in) within 9 months of the end of the financial year. For FY 2025-26, the deadline is 31st December 2026.

The FC-4 return includes:

  • Details of all foreign contributions received
  • Source-wise breakdown (country, donor name, amount)
  • Purpose-wise utilisation
  • Balance in FCRA accounts at year-end
  • Assets created from foreign funds

5. Get Your Accounts Audited by a CA

FCRA accounts must be audited by a Chartered Accountant. The audit report, along with the balance sheet and income & expenditure statement for FCRA funds, must be uploaded with your FC-4 return.

6. Maintain Proper Books of Accounts

Maintain detailed records of:

  • Every foreign contribution received (date, amount, source, purpose)
  • Every expenditure from FCRA funds (date, amount, payee, purpose)
  • Bank statements for both the designated and utilisation accounts
  • Donor agreements and grant letters
  • Utilisation certificates submitted to donors

7. Do Not Exceed the 20% Administrative Expense Cap

FCRA mandates that not more than 20% of foreign contributions received in a year can be spent on administrative expenses. This includes salaries of administrative staff, office rent, travel, and overheads. Programme-related expenses (staff working directly on projects, field costs, etc.) are not counted as administrative.

8. Report Changes to MHA

You must inform the MHA about any changes in:

  • Office bearers or key personnel
  • Registered address
  • Bank account details
  • Nature of activities

9. Do Not Transfer FCRA Funds to Other Organisations

Since the 2020 amendment, FCRA-registered organisations are prohibited from transferring foreign funds to other persons or organisations. This was a significant change that affected many NGOs who previously sub-granted funds to smaller grassroots organisations.

10. Renew Your FCRA Registration on Time

FCRA registration is valid for 5 years. Apply for renewal at least 6 months before expiry. The renewal application requires the latest 3 years of FC-4 returns, audited accounts, and details of activities carried out with foreign funds.

Penalties for Non-Compliance

  • Suspension of registration: MHA can suspend your FCRA registration for up to 180 days pending inquiry.
  • Cancellation of registration: For serious violations, your registration can be permanently cancelled.
  • Freezing of bank accounts: FCRA bank accounts can be frozen during investigation.
  • Criminal prosecution: In extreme cases, violations can attract imprisonment of up to 5 years and/or fines.

How Donateazy Simplifies FCRA Compliance

Donateazy is designed to handle the complexities of FCRA compliance for Indian NGOs:

  • Automatic fund segregation: Domestic and FCRA donations are tracked in separate ledgers automatically.
  • FC-4 report generation: Export your FC-4 data directly from your dashboard — source-wise, purpose-wise, and with utilisation details.
  • Administrative expense tracking: Monitor your admin expense ratio in real-time to ensure you stay within the 20% cap.
  • Donor-wise records: Every foreign donation is linked to the donor, grant agreement, and utilisation report.

FCRA compliance is demanding, but with the right systems in place, it is entirely manageable. If your NGO receives or plans to receive foreign donations, get in touch to see how Donateazy can help you stay compliant.